The Day at a Glance | January 14 2022

The Top

*Retail sales in the United States decreased considerably in December (-1.9% m/m vs -0.1%e.).

*Trade surplus in China logged a record 676 billion dollars in 2021 after a 30% growth in exports.

*Germany`s economy receded 1% during the 4Q21; growth during 2021 was 2.7% annual, below France, Italy and Spain`s expected growth.

*Joe Biden nominated Sarah Bloom Raskin for FED regulation chief.

*If inflation remains high, there could be 4 or 5 interest rate increases in 2022: Christopher Waller, member of the FED.

*Ukraine was hit by a cyber-attack, Russia increases military presence on the border.

Economic environment

Retail sales in the United States disappointed. The most recent data on United States consumption showed weakness by logging a (-) 1.9% contraction in retail sales during December. The decrease was much larger than what was estimated (-0.1%e.) and the “control group”, which provides a better lecture on U.S. consumption, receded (-) 3.1% (vs 0.1%e.). Practically all categories logged declines, including internet sales (-8.7% monthly), clothing (-3.1%), electronics (-2.9%) and household goods (-5.5%). It`s possible that Christmas-related purchases were made in November amidst supply chain issues, which would explain the decrease in December`s retail sales; even though other factors, such as high inflation, could be starting to contribute to lower levels of consumption. Other indicators (like more purchases being made through credit) point towards the possibility that Americans could have spent their pandemic-accumulated savings, which could decrease consumption in 2022. Despite this, the year ended with a 16.9% increase in retail sales, a considerable recovery after the pandemic`s impact.

China logged a trade balance surplus. Chinese exports in 2021 logged a greater than expected increase – one with which the trade balance amounted to 676 billion dollars, a new all-time high since records have been kept (1950) and above 2020`s figure (523 billion). Growth in exports remained robust during the month (209% annual) and logged a 29.9% increase in the entire year despite a slight slowdown with respect to November; meanwhile, imports showed weakness by growing an annual 19.5% during the month – consistent with continuous weakness in the domestic market (due to the real-estate sector and constant mitigation measures that were set in place in efforts to control the virus). Port shutdowns don’t seem to have affected export volumes amidst high global demand for Chinese products. Nevertheless, analysts expect growth in exports to become more moderate in 2022; even though the sector has turned in to the Chinese economy`s main driver for growth.